New bilateral pacts enlarge network on exchange of information for tax purposes

30/10/2008 - Some 16 new bilateral agreements on exchange of information for tax purposes signed this week between OECD countries and the British Virgin Islands, Guernsey and Jersey mark an important step forward in efforts to bring greater transparency to cross-border financial transactions.

The British Virgin Islands signed bilateral tax information exchange agreements (TIEAs) with Australia and the United Kingdom. Guernsey and Jersey each signed bilateral TIEAs with the Nordic economies- Denmark, the Faroe Islands, Finland, Greenland, Iceland, Norway and Sweden.

OECD countries have been working with financial centres around the world since 2000 to bring greater transparency and accountability to cross-border transactions. These new agreements bring to 44 the number of arrangements put in place since 2000. The Isle of Man is leading, with 11 such pacts; Jersey has signed 10, Guernsey nine, the Netherlands Antilles four and the British Virgin Islands three. (Bermuda, also with three, signed its first bilateral agreement with the United States in 1986.) The latest agreements represent a significant extension of information exchange networks in place in these jurisdictions, showing their commitment to implementing OECD’s standards of transparency and exchange of information in tax matters.

The global financial crisis and recent tax evasion scandals have strengthened governments’ determination to fight tax evasion and bring increased transparency to cross-border transactions. “At a time when governments are seeking to forge a more stable world financial system, these are issues that need to be addressed with urgency,” OECD Secretary-General Angel Gurría said.

Progress is being made in other financial centres. Cyprus and Malta have removed the last impediments to a full exchange of information; Belgium has negotiated its first tax treaty with full exchange of information; Bahrain and the United Arab Emirates are implementing the OECD standards; and the government of Hong Kong (China) recently launched a review of its policy on exchange of information.

“The political climate is changing, and financial centres that do not respect the OECD standards will not be allowed to gain a competitive advantage,” Mr. Gurría said. “Every new bilateral agreement demonstrates that we can make progress internationally. It is in the interest of all financial centres to have adequate measures in favour of full transparency as quickly as possible.”